IMF sees Hungary economy stagnating in 2013

Analysis

The International Monetary Fund projects Hungary's economy will stagnate this year in its fresh world Economic Outlook published on Tuesday. The IMF knocked down the projection to 0% GDP growth from 0.8% growth in the previous outlook published six months earlier. “Hungary faces a difficult outlook due to high public and external debt, along with unconventional policies that have eroded confidence and investment,” the IMF said. The projection is well under the government's forecast for GDP growth of 0.7% this year -- a forecast the government lowered earlier on Tuesday from 0.9% in the course of submitting the country's updated Convergence Program to Brussels. The IMF expects growth of 1.2% next year, while the government targets 1.9%. In its latest Winter Forecast, the European Commission projected the Hungarian economy to shrink 0.1% this year and growing 1.3% next year. The IMF put average annual CPI at 3.2% this year and 3.5% in 2014. The projections compare to 3.1% inflation for 2013 and 3.2% for 2014 in the government's updated Convergence Program. The IMF sees Hungary's current-account surplus rising to 2.1% of GDP in 2013 then falling to 1.8% in 2014. The IMF projects unemployment will rise from 10.5% in 2013 to 10.9% in 2014. Hungary's government expects the unemployment rate to fall to 10.7% by the end of 2013. The IMF noted that national definitions of unemployment may differ from its own.

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